Lam Research (LRCX) and ASML Holding (ASML) are two leading entities in the semiconductor equipment sector, providing crucial tools that form the backbone of the chip manufacturing process. As demand surges for advanced semiconductors driven by the booming artificial intelligence (AI) landscape, investors are closely examining these two stocks for potential opportunities.
Lam Research is positioning itself advantageously within AI trends. It develops tools essential for producing next-generation semiconductors, such as high-bandwidth memory (HBM) and chips vital for advanced packaging, both of which are fundamental to AI and cloud data centers. The company has introduced innovations like the ALTUS ALD tool, which enhances speed and efficiency in chip production through the use of molybdenum, and the Aether platform, designed to optimize performance and density in its products.
In 2024, Lam Research’s shipments related to gate-all-around nodes and advanced packaging surpassed $1 billion, with projections indicating this figure could reach over $3 billion by 2025. The company has showcased robust financial performance with over $5 billion in quarterly revenues for the past two quarters, supported by demand from big-name clients such as TSMC, Samsung, and Micron. For the first quarter of fiscal 2026, Lam Research reported revenue of $5.32 billion, reflecting a 28% year-over-year increase, alongside a remarkable 46.5% uptick in non-GAAP earnings per share (EPS).
On the other hand, ASML Holding holds a distinctive edge in the market due to its exclusive capability to manufacture extreme ultraviolet (EUV) lithography machines, essential for producing chips at advanced scales (5nm, 3nm, and soon, 2nm). The demand for these technologies is amplified by the surge in AI applications. ASML is also in the process of deploying its next-generation High-NA EUV machines, which are tailored for even smaller chip fabrication. While ASML’s machines are integral to the supply chain, the company faces challenges stemming from the ongoing trade tensions between the United States and China, which have resulted in export restrictions affecting sales growth. Notably, ASML’s revenue growth has recently slowed, with its latest quarterly results showing a mere 0.7% year-over-year revenue increase, a sharp decline from previous quarters.
When evaluating the growth profiles of both companies, Lam Research appears to demonstrate a more stable trajectory. Year-over-year revenue growth estimates for fiscal years 2026 and 2027 stand at 12.7% and 11.2%, respectively, with non-GAAP EPS expected to climb by 14% in 2026 and 15.2% in 2027. Conversely, while ASML projects substantial revenue and EPS growth for 2025, estimates suggest a significant deceleration in 2026, with growth rates dropping to 3.2% for revenue and 3.6% for EPS.
In terms of price performance, shares of Lam Research and ASML Holding have increased by 130.3% and 49.9% year-to-date, respectively. From a valuation perspective, Lam Research trades at a forward earnings ratio of 33.39, slightly lower than ASML’s ratio of 34.64. Given these factors, Lam Research seems to offer a more attractive price point considering its strength and performance momentum.
Both companies are poised to gain from the rising AI-driven semiconductor investment cycle, but Lam Research’s broader involvement in high-growth AI and memory sectors, alongside its more favorable valuation, positions it as an appealing choice for investors aiming for stronger growth potential. Lam Research currently holds a Zacks Rank #1 (Strong Buy), while ASML maintains a Zacks Rank #2 (Buy), indicating a favorable outlook for both stocks in the long term.